The Children Are Revolting

No, this is not a critique of the parents who allow their little ones to run riot without consideration for others. That’s a contentious topic for another day.

In a political context, the word ‘revolting’ can take on two very different meanings.

Theresa May is probably loathing the youth of today. They turned out in record numbers to send her a not-so-subtle message in the UK election.

Whereas Jeremy Corbyn tapped into millennial discontent. The young voters responded to his ‘call to arms’. Or should that be ‘alms’? Corbyn promised them ‘manna from heaven’. And with ‘pitchforks’ raised, the youth stormed the ballot boxes.

What got them so excited?

‘Jeremy Corbyn has pledged to reduce or even write off £30billion of student debt’, reports the UK Daily Mail.

If you’re encumbered with a student loan, this offer — on the surface — has a whole lot of appeal.

A little further into the Daily Mail article: ‘…But the Labour leader admitted he did not have a “simple answer” for how to deal with the [student debt] problem, and had no explanation for how it would be funded.’

Paying for promises? Minor detail, really.

Let’s not allow the truth to get in the way of a great story.

While on the subject of revolting, a reader — Michael — was far from happy with a recent article.

The 5 June 2017 edition of Markets & Money was titled ‘Debt:The Future Cannot Afford the Past’. It struck a nerve with Michael, who wrote:

‘I read as far as I could Vern. Sickening stuff.

‘What you avoid is a discussion of the rich avoid[ing] their tax responsibilities. And then there is the outrageous granting of tax cuts for the already wealthy. No mention of fraudulent tax schemes and avoidance, including offshore tax shelters.

‘You need to be truthful, something you are having a real problem with. It is wrong to come after the small fish whilst the barracudas are ignored, including multinationals who apparently are not required to pay tax. Add to that the fact that on top of taxes average wage and salary earners are going to be made to pay up for the big end of town.

‘Which side of town are you a part of Vern? Pretty clear.’

The rich don’t pay their fair share. This argument dates back to Adam.

What’s a fair share?

Where’s the tipping point between incentive and disincentive?

What constitutes avoidance and what’s minimisation?

The answers to these questions, will, like beauty, be in the eye of the beholder.

‘Tax the rich.’

As a catchcry, it sounds good — like Corbyn’s ‘write off student debt’ soundbite.

In reality, it’s a simplistic and populist statement.

One that’s far easier to gripe about than to implement.

Wealthy individuals and corporations have access to the very best legal and taxation minds. Their capital is highly mobile.

Even the ‘good guy’ activist, Bono of U2, admits it.

In a Sky News interview in May 2015:

‘Members of U2 have hit back at claims they have sought to shield millions of pounds in overseas tax havens.

‘“It is just some smart people we have working for us trying to be sensible about the way we are taxed,” he said.

‘“We pay a fortune in tax, a fortune, just so people know, and we’re happy to pay a fortune in tax. Because you’re good at philanthropy and because I am an activist people think you should be stupid in business and I don’t run with that.”’

These ‘tax havens’ are home to multinational corporations (or their subsidiaries) and rich individuals.

Monaco and the Bahamas are very popular with sporting stars — tennis players, golfers, Formula One drivers — and investment bankers.

The very wealthy end of town have no intention of subsidising (more than they have to) the pork barrelling of the political class. You may think this attitude is ‘unfair’, ‘outrageous’ or ‘fraudulent’.

Well, life is not fair. Get over it.

As Bono pointed out, the wealthy are not stupid.

We have to acknowledge the reality. An egalitarian tax system is nothing more than wishful thinking.

Sovereign countries have the legal right to establish their own tax regimes. Some — labelled ‘tax havens’ — are more generous. Others have a ferocious appetite for tax.

Those with the means can choose to stay, go or relocate.

Surely they’re entitled to exercise that right?

In February 2017, CNN reported: ‘Over 12,000 millionaires left France last year, according to New World Wealth. In total, the country has experienced a net outflow of over 60,000 millionaires since 2000.’

Terrorism fears may have been the final straw for some wealthy French. But the primary reason to say au revoir was the onerous tax regime…supporting overly generous socialist programs.

Margaret Thatcher famously said: ‘The problem with socialism is that eventually you run out of other people’s money.’

A few years ago, ‘the cost of dinner’ story was doing the rounds. Here’s a snippet from The Globe and Mail:

‘Each and every day, 10 men go to a restaurant for dinner together. The bill for all 10 comes to $100 each day. If the bill were paid the way we pay our taxes, the first four would pay nothing; the fifth would pay $1; the sixth would pay $3; the seventh $7; the eighth $12; the ninth $18. The 10th man – the richest – would pay $59.’

Maybe I’m wrong, but it looks to me like the austerity belt has actually been loosened a notch or three.

Let’s live in fantasy land for a moment. The government has managed to trap and tax the rich. Sufficient dollars are raised to put the budget back in the black. How long do you think this would last? A year — two or three at the most. Politicians would do what politicians do…promise more than can be afforded.

The Rudds and Swans of this world would have us back in the red before ‘Kevin 07’ can say: ‘I’m an economic conservative.’

Now, let’s get back to reality.

Michael advises me to be truthful. Experience tells me there’s at least three sides to the truth.

Here’s my simple version.

Demographics are against us.

The ratio of taxpaying workers to tax-receiving retirees is in decline.

People are living far longer than was ever expected when age pensions where introduced.

Globalisation promises, among other things, to end taxation along with elected governments making promises to be paid for with taxes. Instead the World State replacing all the nation states will be run by a consortium of corporations and the price mechanism (user pays the corporation’s price) will replace services provided through tax expenditures. As with the present system it will hurt the poor more than the rich who have more disposable income. However, because millions of people will be put out of work by robots, they will have to be given some form of income so as to consume the… Read more »

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3 months 29 days ago

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